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tv   Street Signs  CNBC  December 11, 2012 2:00pm-3:00pm EST

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to the product. t-mobile announced they are going to be on the network. yes, a lull over the last few months. >> maybe a time to buy. >> i think it's a time to buy if you have a couple years. >> thanks for being with us. >> see, back to you. >> thanks for being with us on "power lunch." a must see show, black rock's 20-year outlook on stocks and bonds. mission critical, rise above d.c. continues on "street signs." of course, that continues right now. have a great afternoon. we'll see you tomorrow. >> announcer: america, we're on the edge of the fiscal cliff. billions are at stake and your money hangs in the balance. while washington quarrels with itself, time for washington to put differences aside and put real compromise on the table. rise beyond disparity, rise past adversity, rise above. this is a cnbc special report
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"mission critical, rise above d.c." >> and the mission continues at 2:00 eastern time. welcome everybody i'm brian sullivan along with mario bartiromo. this is our special all day coverage live from capitol hill, mission critical, rise above d.c. after candid interviews with lawmakers all morning long, this is what we know now. just last hour representative lee terry, republican from nebraska tells us he feels like discussions on spending cuts are going backwards. early in the morning, democratic senator conrad, about to finish his term, sees says optimistic a deal will get done but would like to see a whole lot more added to it, a $4 trillion big deal, as he calls it. >> yes, he did. earlier this afternoon, a key word from speaker boehner. the recent silence from his office and the administration breaking down. listen to this. >> i'm hopeful we can reach an agreement. this is a serious issue and
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there's a lot at stake. the american people sent us here to work together towards the best possible solution. that means cutting spending. now, the president doesn't agree with our approach, he's got an obligation to put forward a plan that can pass both chambers of the congress. >> joining us right now, republican senator from georgia, johnny isakson, good to have you on the program. thanks for joining us. john boehner saying he wants to see spending cut proposals on the table. where specifically would you like to see those cuts come from. >> first of all, entitlements are $2 out of $3 we spend, $2.7 trillion a year. they need to be reformed. over time you can save a lot of money without taking away what people have paid for in terms of social security and medicare. we have to cut discretionary spending. i will tell you discretionary spending is $1.trillion 182 billion. our deficit was $1.2 trillion. we're $18 billion short of having nothing if we canceled
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the entire government. you can't do it without entitlement reform. >> senator, when you're talking entitlement reform, billions in deficits in medicare and social security over the next 10, 20 years. where specifically do you cut? do you tell people, no, i'm sorry. you're cut off. >> you tell them what ronald reagan told me in '93, social security going broke in 2011. he pushed my liability from 65 to 66. that put it in shape. >> how much does one or two yearsed t retirement mean? >> a lot. it compounds over time and the period of time you do it. my grandchildren, age 70, not 67. second i'm not beyond means testing colas. maybe shouldn't be as high as for the bottom end. when the president is sitting in an ivory tower or in detroit and we're trying to do the people's business. >> where do you think the real
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compromise is coming out? do you believe john boehner and president obama this weekend had a serious discussion? where are we really in this compromise? >> well, i've learned a long time ago up here what you don't know sometimes can kill you. if you don't know anything, it means something is going on. i hope they had substantial negotiations. >> you have no idea if it's true. >> too many people negotiating is a bad thing. >> you can't have 500 people in a room negotiating, right? you have been pretty vocal over the debt ceiling debate. very soon after this fiscal cliff issue moves forward, we're going to be moving forward on the debt ceiling debate. you have said you do not agree with president obama that he basically wants to take this debt ceiling debate off the table and this no barriers. why? >> it's like taking the limits off a teenager daughter's credit card. if you don't have limits you're going to spend forever. if the president didn't have limits, didn't have to come to us, work out an agreement,
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spending goes on forever, debt and deficit, pretty soon -- >> play with people's lives every couple of years on this debt ceiling. look, i want this, otherwise i'm not going to prove it. >> don't play with lives but pocketbook of american people. time we stopped spending so much. debt cap is like credit card cap, it works. >> there's been a suggestion where he need to reduce mortgage interest deduction, a million dollars. should that come down. >> you shouldn't never pick one deduction out and say that's where i'm going to do it. i favor capping on a means test. for example, if you're in the top 2%, maybe maximum deduction is $35 million. you cut out the aggregate and cap at the aggregate. that way you're not picking on one benefit. >> senator, i understand that you have to go where the money is. the money is at the top 2% and grown dramatically in the last two years.
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every year a million teenagers drop out of high school, we've created jobs and 800,000 people have gone on permanent disability. okay. a lot of those are valid. some suggest many are not. when do we also start to ask more from everybody? >> well, we have to have accountability in our benefits system. you just hit on the nail on why entitlements are so important. ssi disability is an entitlement. medicare is an entitlement. medicaid, sorlgt security, retirement to fed employments is an entitlement. we need it out board. >> if you get cuts from the three biggies and they are not going to touch social security. let's put that aside. it doesn't seem realistic. you're not hearing that conversation. >> even though it's the easiest to cut. >> medicaid and medicare. are you willing to give in terms of raising taxes on the rich. >> as long as raising deductions you're talking about or through rates, as long as it's tied to debt and deficit reduction, then you have the framework under
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which american senate can make a deal. >> can't sell deductions, easier to say we're going to raise taxes on the rich. through these tax loopholes we may or may not raise money. that doesn't sell politically. >> john boehner put $800 billion on the table in his first offer to the president. the president has put nothing on the table in terms of debt and spending. >> when are you expecting something from the president. >> clock is ticking, 31st of december is coming. new year's day is coming. the president of the united states, leader of the greatest democracy in the world wants us off the cliff for political benefit, terrible for the american people and our country. >> are you going to go on vacation for the holidays if a deal isn't done? >> no, ma'am. >> good to have you on the program. very much appreciate your time. stay tuned at the top of the next hour for special edition of "closing bell." live from the white house where i'll be joined by alan greenspan to talk about these issues. >> greenspan coming here? >> coming to the white house
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which is where we'll be. >> shame he's not coming here. we want to hear your ideas. tweet us with what you would cut. you heard some of our conversation and dialogue here all day. what would you do? what would you cut out to help avert the fiscal cliff? use the #cut this with your ideas "street signs" or at mandy cnbc. speaking of @mandycnbc, inglewood cliffs, i'm at our nation's capital. good to see you. >> good to see you and everybody. thanks for those that already tweeted in answers. look at this, we found someone really rising above. we say we rise above, others rise above but this is really rising above. her name is nancy. she is wearing as you can see there in her ears a rise above pin. hats off to her, maybe we can take a page out of nancy's book. in the meantime, this is what we've got coming up for you. a really big show on top.
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hopium in full swing. "street signs" things it can be done, tell you how to of moo your money. signs point to a housing recovery. if a deal does not get done, could housing be the biggest hit of all. herb, he's back and he's ready to deliver his bold prediction on jcpenney. what else? you do not want to miss it. we now know where the last twinkies on earth were delivered. we'll tell you. it's a big show and it all starts next. stick around. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes.
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hello and welcome to "street signs." i'm brian sullivan, landfall in washington, d.c., the cannon rotunda. this is the house office building, and we've been here all day for "mission critical, rise above d.c." mandy, i walked all the way from cnbc last night just for the "street signs" viewers. i care. >> you better start walking so you're back in time for tomorrow's show. meantime let's have a look at what the darkts are doing. here is a great factoid for you. folks, with today's gains, major averages made up all of their losses since election day, which as we know was november 6th, a really nice meltup going on in the markets albeit on fairly
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light volume. find out what's going on with bob pisani. no fiscal cliff, markets don't care, vix doesn't care. >> up 5 1/2%. there's a lot of people, mandy, that think when we get the deal, that's what you take profits. fiscal cliff, that means awe sisterity. speaker of the house, john boehner said we're still negotiating. he specifically said where is the president on spending cuts, basically threw it back in their court. came off the highs. terms of sectors moving, nice move up in a bunch of groups. semiconductors back, texas instruments had comments, drug index doing well. merck and most of those other big names.
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sanofi up. delta acquiring a 49% stake in virgin atlantic from singapore, consolidation going on. booking trends have been strong or airlines as well. defense look at this, dfx, historic high. what sequestration worries out there. bottom line, everything on the upside. one sector i want to point out, dollar stores. dollar general came out with an outlook a little below estimates, look, down 7%. all the other ones a downside. they cited tough comps coming up and there are. a challenging environment and a challenging competitive environment. even the dollars stores in a tough competitive environment. >> dollar stores say their margins could be hit in 2013, a story to watch out for. bob pisani, thanks so much. back to you. >> we've gotten the word electric washington, now the street. chief global strategist and
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senior portfolio manager at huntington asset managers. i came down here fairly optimistic, seemed to believe something would get done. we've spoken to three or four congressmen, especially in the house, they are far apart. lee terry from nebraska said, guess what, my constituents have no interest in giving in to a tax hike. >> clearly what you're hearing is sort of where we've been for some time now, a portion of the house elected in uncompetitive districts see really no reason to compromise with the other side and leave aside the philosophical differences for the two. how these two come together in the next couple of weeks is really something that remains to be seen. we know taxes are going up. the question is by how much the spending side of things. you're simply not going to get republicans to vote in favor of a tax increase unless they are
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given something. >> i don't understand why the stock market up five days a row, x number of companies making all-time higs. were these hyperbole statistics, bring them together. >> give or take in a more secular sense sideways. i think we're getting some positive tone out of washington. but the reality remains as far as we know, they are no closer today to a deal than they have been in the last couple of weeks. >> do you think there's a possibility it's going to be, as bob pisani put it, buy the rumor and sell the fact situation? >> the market i think at this juncture is dealing with the unknown at this point. we saw this after the election. as soon as the unknown was erased and very likely capital gains taxes going up, wholesale gains taking across the board. once mutual funds had to close at the beginning of november, that's over, now back to
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floating stocks up. look around the globe, european stocks held hodge the way we are, you'd expect european markets to be down. right now only one down for the year. the free enterprise system will power past politics. they will either lead or get out of the way. one way or another the market wants to go higher because in effect the system will continue to grow. politics at this point don't matter. >> without flogging the point here, to bob pisani's point, we get a deal, clarity, uncertainty taken away, but hello american austerity, taxes higher, spending lower. a more difficult environment for stocks in 2013? >> it could very well be. it will more likely be a stock picker's market, sectors that will win and sentors that will lose as a result of this. that's all it will do, sort out winners from losers. there will be areas such as agriculture which will continue to power higher as they have all year. defense may be under pressure, consumers may be under pressure.
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global technology may get a green light in all of this. what it will do is sort out winners from losers and allow investors to focus energy and money. the market wants to go higher at this point. >> dan, i'll tell you what market should go higher in all of this, u.s. treasury market, if spending goes down and tax grab from the taxpayers going up, ie, government revenue, shouldn't that boost u.s. treasuries? >> boost prices? >> why not? >> certainly to the extent austerity is more vicious -- >> and the dollar. >> than is currently modelled, that would be optimistic for treasury market and currency market. listen, at the end of the day, this whole idea of the fiscal cliff, they are going to figure this out and kick the can down the road and give themselves nine months or a year to figure this out. it's not going -- this is not going to stick. is just simply not. >> dan, here is the problem. if they wait until fourth of july to get this done -- how
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long is the can? call it mamp when they get a deal done. if you don't know what your tax rate is going to be for 2013 and you're waiting for congress to make a deal, you're not going to spend as much money if you're in the group that's going to get whacked, you're going to sit on that and say i don't know if i owe an extra 15 grand to the government or not, i sure as heck will not spend it. >> let's be clear, if this goes to march or july 4th, the u.s. is in a recession, no doubt about that. i'm talking about getting a deal on the other side. >> the road ends. >> let me repeat something i said. it's easier for a decrease than increase, going into the new year, one second or one week allows house republicans to do that. if you're through into the summer, the stock market is not at 1500. >> okay. never underestimate how big the can is and how long the road is. gentlemen, thank you very much for joining us. as if all this deal, fear and loathing was not enough for you,
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the market is keeping a close eye on the fed because bernanke and the gang are meeting right now. tomorrow we'll hear from him. steve liesman, what do we need to hear from him? >> well, what we're going to hear is about additional asset purchases. 88% of respondents to our fed survey saying the fed will replace with outright purchases. i'll tell you our respondents, economists and strategists and around lists are giving bernanke and earful over what he's doing. let me first show you what the expectation is. replace twist, selling long-term, buying without purchases divided over whether or not it's going to be treasuries only or a mix of treasuries and mortgage-backed securities. now, how much will they do? the expectation if you look at the next chart, but there's going to be an $85 billion purchase. you can see the top choice is $85 billion. 30 announced and another 45 to replace twist.
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that's the expectation with some distribution along the scale there. what does that mean for the whole year, next 12 months? take a look. this number here seems kind of small. that's a trillion dollars, folks. that's the expectation of 35% or more of our respondents, next year fed's 2.8% balance sheet will grow by $5 billion. will it disrupt functioning and pricing? now the answer is yes in a reversal from september when 43% said no. now nearly 60% say they are afraid the fed taking all this paper off the market is going to disrupt mark pricing and functioning of it's a key fear of the federal reserve. they have spoken quite a bit about it. they say it will not do it. moving on show you commentaries. i know they are long. zero interest rate policy and
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contate i have easing, difficult to see how or when the fed could unwind these policies without major economic or market dislocations. the fed has stayed too long at the party. one more comment, "monetary policy dampening the animal spirit of the business cycles and long-term effects of qe could be detrimental to economic growth and stability. we might ask questions, throw criticism at him. but right now, it feels like bernanke is losing the street. the street is upset about the fiscal cliff and not all that happy about monetary policy. >> maybe stay a little longer at the party. no matter how many billions or trillions the feds show, when is the economy going to clear the hurdle, that is that the labor market improves substantially to start that winding down process. >> i think it's going to take time. i think we have a chance of getting below 7% next year. but the problem is going to be if the economy improves, if the
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job market improves you could have people back in the employment force, raise unemployment. possible in the next half. if we could start rid fiscal cliff and get confidence we could have hiring, which should be in the 2 or 3,000 range, stop messing around with this 100, 150,000 a month. >> as steve said, tomorrow is a big day on christina. the fed decision at 12:15 followed by complete coverage of bernanke's conference beginning at 2:00 p.m. eastern, which, by the way, is the start of "street signs." right, brian? >> yes. and that 2:15 special will be mosted by me. i would give steve liesman a high-five as we go by trains, i'm on the milk train for amtrak. we've got a rally today, there's a big lack of trust in the market. next, a new survey says 68% of people do not think stocks ar
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incredible scenes out of lansing, michigan. earlier today the michigan legislature passed the right to work bill essentially ending mandatory union payments all in a state that gave birth to u affi aw. goes to members desk. live in lansing, joe. >> reporter: well, it got ugly here a little while ago. the demonstrators parked in front of the capital most of the day. this is the scene just outside the capital across the street and in front of the governor's office. massive state police troopers have tried to force the crowd
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north down the streets to try to get them from the front of the governor's office. we understand the governor is going to sign this legislation any minute now or any time this afternoon. as can you see there's a very, very large standoff, if you will, right now, both front and back of us of supporters of organized labor in the state of michigan and elsewhere, as well as michigan state police trooper trying to keep some sort of semblance of order here. again, the house in michigan passed legislation earlier today. it is on its way to the governor's desk for his signature. this is only one example of some of the protests we've seen. earlier today the pro group that supports right to work had a tent set up. suddenly the crowd went to that tent and tore it down. nobody was injured. some pretty tense moments there.
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can you hear it right now. >> so they tore down the tent of the people that were supporting the bill. they did not give them the chance to express their views. >> no. we're not clear exactly what precipitated the whole thing, but, yes, basically somebody rushed the tent. i was talking to somebody outside the tent with a group supporting the right to work. they kind of rushed it and knocked out one of the tent polls and down it came. most people heard something was going to happen, so they had gotten out of that. nobody was injured. but again it seemed to heighten the tensions here in lansing. now you're seeing more problems outside the governor's office. i'll give you a scene of what we're looking at right now. that is union supporters, right to work, tractors, if you will. off to the other side, we're basically surrounded by them as
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well. they have been trying to get into the governor's office. there have been some arrests here as we watch this crowd gather. some people taken away in handcuffs. right now trying to calm the situation. >> outside the governor's office in lansing. mandy. >> 68%, that is the number of respondents in a new well fargo gallup survey that have little to no confidence in the stock market as a place to invest for their retirement. what are they doing with money? let's bring in, director, great to have you with us. joe, where are they putting their money? where do they think is a good place for retirement? >> lots of uncertainty. clearly they are focused on the deficit, divided government, unemployment, global economy. so people have taken a lot of risk off the table. what we advise is invest for the long-term.
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have plan, invest for the long terp. you'll have ebbs and flows in the market. >> 68% of responders say the stock market is not a good place to invest, where are they putting it? is it cash on the sidelines? >> right now we've seen risk off the table. 45% of our investors have said they have taken money out of the market over the last four years. clearly they have gotten more conservative and taken risks, off the market. >> joe, is this why housing has taken off, art, gold has taken off in the last few years ago? is that where the money is going to mandy's point? >> no, i think at this point people want to have a diversified portfolio. we tell them to invest for the long-term, work with their adviser, have a plan and really ebb and flow with the market. you're going to have ups and downs but you're going to have a plan. >> it appears, diversified in this point may mean the choice between the mattress and sock drawer. >> clearly hard to get returns in this market. you've seen the market ebb and flow. what we try and work with is save as much as you can.
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a market is going to have ups and downs. your returns will ebb and flow. clearly what we've seen in the market, brian, people saying i'm going to have to save my way to retirement. in the survey, we need help. >> but saving is so hard these days. you put your money in the bank, what do you get in terms of return. where on earth can you get a decent percentage return, where you feel i'm going to be ready with my nest egg when i need to retire. >> think about retirement, a long-term investment. look at the stock market over the long-term, traditionally outperformed. right now a good place to be. understand your time, invest quarterly. >> okay. thank you very much for joining us, joe. hopefully next time you'll come back with better findings. also coming up next, we are street talking with where's waldo? no, where is herbie, his new year's prediction for none other than jcpenney. americans are always ready to work hard for a better future.
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welcome back, everybody. it is street talk time. the two bigers stakeholders in the company selling out. >> with kkr and bane leaving, you want to immediately say this is horrible news. symptom reacted a little bit, it's not great news.
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what i like to look at, when a contrarian comes out and has another opinion. that's an analyst we've had on here before. she's from crt, often very edgy, not afraid to be negative. in this case she sees this as a positive. what she wrote in her note that grabbed my attention. the way they are going to do this,er are, they are going to sell without a special dividend. she said, this seems to be the method less likely to adversary effect the share price. she calls it a smart way to do this. private equity. they are going to get out. she sees this as the smartest way to do it. >> let's look at groupon. we're expecting market moving comments out of the ceo at a mobile conference. anything market moving yet. >> andrew mason said absolutely nothing. >> nothing. >> but what he specifically didn't say is he did not say anything about the rumors that google could acquire the
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company. >> groogle. >> i'm channeling brian. in the market since last friday. google made a bid, $6 billion. this is a business that hasn't evolved the way anyone would expect. would they buy it? who knows. >> can you believe they knocked back google's offer in 2010 and instead decided to go public. >> i forgot you were there. >> by the way, i was just off camera seeing how the sausage is made because this the ultimate sausage manufacturing facility. i heard that. i never said groogle, dieseline but never that. >> i thought who it was an efficient use of google and groupon. >> may be that if rumors are right. if rumors are right, it may be that. we may have that before long. >> by the way, herb, can you stick around for this one as well because i believe you've got a little bet hanging in the
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balance, brian. jcpenney, your prediction. >> stocks up a bit. before the prediction, i want to say, enof the year isn't here. stock has to go up 15 points. if it does, still beat brian on the bet. >> you think jcpenney is going to double in two weeks. >> i said all it has to do is rise another 15 points. >> jan turned positive, talked to a focus group who said they loved it. >> my prediction i hinted out two weeks ago when i was here and get to now, really something he mentioned, that is the company next year will have positive comps because it almost can't have positive comps in at least one of the quarters going forward. what the stock did today shows you what could happen. this stock could do a big turnaround based on one small bit of positive news. >> herb, herb, herb. >> expectations alone. >> herb, i made a bet yesterday that i do not believe jcpenney
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will have positive year over year comps any quarter next year. that's going to be right. >> that's wrong. i will take that bet. jan and i will both take that bet. >> another bet out there, your prediction -- >> tomorrow, i've done a series of predictions here. i think maybe tomorrow we could do the microsoft prediction. brian taught me about teases. tomorrow we'll do the big microsoft prediction i have, i think is a pretty interesting one. >> training session on intros as well, fascinating. >> training on my flogging session as well. floggings will continue until moral improved. >> let the floggings commence. a really big headline today. that is the airline index is trading at its highest level since july of last year. why? on the news delta will buy a 49% stake in virgin atlantic. let's bring in our phil lebeau. we'll be talking about this. there is speculation and where there is smoke, there is fire.
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>> a lot of people are sitting here saying, what's in this for delta. is this a smart move? almost everybody when you look at what delta is getting here, for $363 million it is a smart move, 49% stake in virgin atlantic, the stake singapore airline held, they expect approval by mid 2013. when we talked to the ceo of delta earlier today, he made it clear this is all about greater access to the uk market. >> traffic flows between the u.s. and uk for business travelers represents $2 billion in revenues. massive. >> when you look at star, skyteam, what delta is part of, versus oneworld, they are all joking to increase their market share. no word on whether this will be the case with virgin atlantic joining skyteam. don't be surprised if that ultimately happens. take a look at shares of delta
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enjoying a nice day today. you mentioned airline index, yes, it is trading at a one-year high. a heck of a chart up 20%. not just on the delta news but increased speculation that the usair a mulmr merger will happe the future. there's been some developments over the last few days. that's why you see the airline stocks bidding higher. >> one thing about this deal, you talk about a $360 million deal. a week ago people were talking about or last week talking about $1 billion plus. what's the difference between -- that is a huge difference between the ultimate deal? >> very huge difference. i think ultimately you look at singapore airlines, it needed to get out of this arrangement. it was not making money. it was struggling to figure out how it could tap into that heathrow market. they have those long hall flights from singapore. the traffic from there versus united states, delta sitting in the catbird seat here. >> thanks for that, phil. we've got to leave it there.
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coming up next, all signs pointing to a housing recovery but will the cliff bring that to a screeching halt. we'll ask chief economist and the man behind the biggest dirty money crackdown in history. ♪
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i'm bill griffith. coming up on closing bell, stocks rallying about a fiscal cliff deal. we'll be speaking to some of the key players in washington. congressman chris van hollen and javier becerra. orrin hatch will tell us what it will take to reach a compromise. alan greenspan explains why a fiscal clif-related recession would be a small price to pay for much needed fiscal policy reform. all that and more. what's been happening on wall street today as we get to a final hour of trading at the top of the house on closing bell. maria in washington, i'm in new york. we'll see you then. >> we will indeed. sounds like an exciting show. thanks, bill. >> mandy, have to break in here, some breaking news on fiscal cliff. heard what bill said. some headlines out of harry reid which may not be good news for the market. harry reid saying the democratic party will not put an offer of
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spending cuts on the table for the gop. reid also adding he does not think we will have a deal on the fiscal cliff before at least christmas if not longer. so think about that. harry reid saying no, no, no. republicans asking us to present cuts. we want them to present cuts. clearly this is political gainsmanship. democrats want gop to be the one to go to the american people to say here is what we're going to cut from your entitlement programs, mandy. reid saying we don't think a deal is going to get done before christmas. that does not bode well. the dow industrials are up. you can see they have ticked down a little bit. harry reid, a very, very powerful member obviously. senate majority leader. this is a guy deeply involved in the negotiations. when he speaks, it means something. we'll keep watching those markets. meantime, huge dirty money crackdown. british banking giant going to
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have $2 million in penalties, it helped aun and mexican drug cartels avoid u.s. sanctions and antimony laundering laws. scott in washington with more. >> brian, the others include cuba, sudan, burma, countries under sanction. the biggest yet by a money laundering task force headed by the justice department's criminal vision, assistant town brewer. he's up in new york and joins us first on cnbc. mr. brewer, good to see you as always. >> good to be here, scott. >> this seems to be a pattern that's developing. hsbc avoids prosecution, deferred prosecution, keep their act clean, pay a fine and they move on. it's a big fine but all of about six weeks worth of revenue for this country. are you comfortable with the way this is playing out? >> scott, this is a very, very historic resolution. hsbc is not simply walking by and shaking its hands and saying
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we're done. they are being held accountable in a way that's almost never been done before. first the entire management in leadership involved at the time these crimes or this conduct because going on is completely gone. their compliance program has been increased dramatically. whether they had 70 or 80 people doing this kind of work, they have over 800 people, probably a couple dozen consultants, now they have probably 250 or 300. for the first time ever, a foreign financial institution is going to have a monitor. that monitor is going to be involved for five years. deferred prosecution agreement is for five years. senior executives are giving up bonuses. we've clawed back. moreover, any point they do anything wrong whatsoever, we can always still prosecute them further. >> there is no prosecution of individuals now. that has led to some criticism, as you know. i want to show you what global
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witness, the big anti-corruption group you're familiar with had to say about this. they said basically fines are seen as a cost of doing business. fines alone are know not going to change bank's behavior. the chances of being caught are relatively small, potential profits too big what do you say to that? go ahead. >> i say it's wrong. let's look. we have them for violating secrecy act. lack policy and procedures hsbc had in place for probably 10, 15 years. they also had lax practices for transactions with prohibited countries. they were trying to save on the bottom line, so they didn't have the appropriate compliance programs in place or the appropriate antianti-money laundering. there's no one at hsbc that was
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the mastermind. policies that went on, mid level executives simply carrying what went on before. holding them to account in a way. held to money laundering, paying $2 billion. they have reformed. that's the real point. they have reformed the underlying conduct. >> all right. lanny. breuer. head of the justice department's criminal division, this is going to from this task force. we appreciate you taking the time to be with us here on cnbc. >> coming up next, the one sector that could be crushed if we go over the fiscal cliff. if congress fails to extend tax cuts or to stop sequestration before the end of the year, this will result in an additional $491 billion in revenue over fiscal year 2013. what's next?
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welcome to the world leader in derivatives. welcome to superderivatives. the mortgage interest deduction is on the chopping brock in debt talks. won'ting this deduction send housing over the cliff? let's ask a chief economist and
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truly great to have you with us. it feels in terms of the housing market we're damned if we do and damned if we don't. >> mandy, going over the fiscal cliff would by far be the worst thing for the housing market. remember, the first thing that happened during the first obama administration for the housing market was the 2009 stimulus. that about $800 billion over a couple of years, but the fiscal cliff is more than the reverse of that. it's more than an anti-stimulus, and everything that the stimulus did to help the economy and the housing market, fully going over the fiscal cliff would do even more in the reverse direction. >> okay. >> that would be the worst thing. >> that would be the worst thing. putting aside the worst case scenario and the mortgage deduction cut first. we've made great strides, right, in terms of the housing recovery? if anything we're accelerating in the housing recovery this year. are the fundamentals strong enough to just be able to overstep any problems with the mortgage deduction? >> it depends what happens with
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the mortgage interest deduction and we don't know yet what the details will look like. no one is suggesting eliminating it immediately. the proposals are likely to be slowly over time. they are likely to be gradual or partial. the main effect of cutting back on the mortgage interest deduction it would make homeownership more expensive. if people find homeownership more expensive they won't bring as much for homes, and that brings down home values. >> do people have a dream of owning a home? do they still want to own a home? do they see it as a good investment? >> still 72% of consumers say that homeownership is part of their personal american dream and even more so young adults, the millennials, 18-34, they feel the same way even though they are the ones for whom much of their adulthood has been this crazy housing boom and bust. they are as optimistic about homeownership as older adults are. >> okay. we have to leave it there. let's hope 2013 continues the
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housing recovery. we've come so far. got to keep on going. >> thanks, mandy. >> your fiscal cliff fix is coming up nicks. all night. is this a trick to get my spot? [ male announcer ] break from the holiday stress. save on ground shipping at fedex office.
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starting with across-the-board cuts of discretionary, various things and focus on entitlements, and then let's flip over, another one coming in from john saying cut every single outlay, 10% across the board. raise revenue 10% across the board. repeat as necessary. brian? >> you know, some good ideas here, but i'm going to remind everybody the numbers i tweeted out and we talked about yesterday, the average family will extract two to five times more in medicare than they pay in, across all income spectrums. looking at $300,000 deficits per typical household in the united states and we're looking at a $60 trillion social security deficit with medicare over the next 30 years, mandy. the numbers are massive. we'll get a deal done hopefully, but really we've got a democratic cliff. as i tweeted out earlier, everybody needs to make babies and those babies need to be 10 years old right now. >> they have got to sow

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